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Medium Merger & Acquisition Financial Analysis

Juice Manufacturer

#Consumer Goods #Agriculture

Practice this intermediate merger & acquisition case interview question in the Consumer Goods sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This case tests the candidate's ability to structure an M&A valuation problem, extract key financial metrics from projections, and calculate ROI correctly. The solution requires careful interpretation of financial data (net sales, COGS, SG&A) to derive operating profits, then apply the purchase price formula using the revenue multiple to determine investment basis and returns.

Estimated Time 25 minutes
Difficulty Medium
Source PeterK
19 / 100
A large dairy company, Lean Foods, would like to acquire Aunt Jen’s Organic, a juice producer. Its valuation will be based on a revenue multiple of 0.3x, given Aunt Jen’s Organic’s history of losses over several years. What 3-year ROI should Lean Foods expect from this investment?

Clarifying Information

  1. Exhibit 1. Projected Finances of Aunt Jen’s Organic, 2023-26F
  2. We’re in early 2024
  3. We can ignore taxes and interest expenses
Mock Interview
Interviewer

A large dairy company, Lean Foods, would like to acquire Aunt Jen's Organic, a juice producer. Its valuation will be based on a revenue multiple of 0.3x, given Aunt Jen's Organic's history of losses over several years. What 3-year ROI should Lean Foods expect from this investment?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

Lean Foods is considering acquiring Aunt Jen’s Organic at a 0.3x revenue multiple. Using projected financials for 2024-2026, the candidate must calculate the company’s operating profits over three years, compare this to the purchase price (0.3x 2023 revenue), and determine the resulting ROI, which yields 50%.

Key Insights:

  1. Operating profit calculation requires: Revenue × (1 - COGS% - SG&A$/Revenue)
  2. Purchase price is based on 2023 revenue multiple (0.3x × $100M = $30M)
  3. 3-year ROI = (Total Profits - Initial Investment) / Initial Investment
  4. COGS improvements are driven by economies of scale from 30% revenue growth
  5. SG&A costs remain relatively flat due to fixed cost structure
  6. Advanced candidates should contextualize the 50% return as attractive but dependent on aggressive growth and cost reduction assumptions

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